In a pre-Budget meeting with Finance Minister Nirmala Sitharaman on December 26, apex engineering exports promotion body EEPC India proposed introducing a conditional 25 percent income tax slab for Micro, Small and Medium Enterprises (MSME) manufacturing units that are partnerships, LLPs, or sole proprietorships
This new income tax slab can come with the condition that the extra 10 percent saved must be reinvested in the business, EEPC proposed.
"This will give MSMEs extra cushion of 10 percent for expansion or working capital improvement and improve their liquidity. This will also generate employment due to expansion undertaken by MSME units," EEPC India said.
Sitharaman chaired her fourth pre-Budget consultation with stakeholders and experts from export, trade and industry sectors in New Delhi ahead of the presentation of the annual financial statement for 2025-26.
EEPC also batted for increasing funds allocated under the Market Access Initiative (MAI) Scheme to Rs 1,200 crores to support MSMEs in participating in international trade events and connect with their global counterparts.
"Allocating specific funds for capacity-building programs targeting prospective exporters in interior districts and rural areas would enable them to enter international markets," said EEPC India Chairman Pankaj Chadha.
In order to support MSMEs in transitioning to sustainable energy practices, EEPC India has proposed to introduce a policy allowing 100 percent depreciation on investments in solar power generation by such firms, similar to previous benefits provided for wind power generation.
This would incentivise MSMEs to reduce their carbon footprint and lower energy costs, EEPC said.
Among other proposals, EEPC India recommended establishing a transparent and effective mechanism to ensure MSMEs can access steel at affordable price amid speculations that the government may introduce a safeguard duty on the metal.
"The introduction of a safeguard duty on certain steel imports may increase the landed cost of steel, leading to higher domestic prices. For MSMEs, steel constitutes 60 percent of their production costs, making them vulnerable to global competition and potential job losses. While steel producers have agreed to supply steel at export parity prices, MSMEs often purchase from intermediaries like agents or distributors," Chadha said.
Like Federation of Indian Export Organisations (FIEO), EEPC India too recommended hiking the cap under the Interest Equalization Scheme to Rs 10 crores to provide more substantial financial support to MSME exporters.
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